Recording Multiple Temporary Differences The records of Anderson Inc. provide the following information for the tax...
Recording Multiple Temporary Differences
The records of Anderson Inc. provide the following information for the tax year 2020.
- There was no beginning balance in deferred tax account(s).
- Taxable income for 2020 was $168,000.
- Tax rate is 25%.
- Three temporary differences were identified:
- Estimated litigation accrual of $56,000, not deductible for tax purposes. Settlement not expected to take place until 2022.
- Excess of accelerated depreciation over GAAP depreciation of $33,600 caused a difference in the $140,000 GAAP basis and the 106,400 tax basis of equipment. One-third of the difference will reverse in 2021.
- Unrealized holding gain on equity securities of $9,800 not recognized for tax purposes. Anderson Inc. intends to sell the security in early 2021. The investment (accounted for under FV-NI) is reported at its fair value of $28,000 at year-end in its financial statements.
- a. Record the income tax journal entry on December 31, 2020
- b. Record the income tax journal entry on December 31, 2021, assuming taxable income of $350,000.
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Recording Multiple Temporary Differences The records of Anderson Inc. provide the following information for the tax year 2020. There was no beginning balance in deferred tax account(s)
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Recording Multiple Temporary Differences
The records of Anderson Inc. provide the following information
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